What Happened:
Shares of fast-food pizza chain Domino’s (NYSE:DPZ) jumped 8.6% in the morning session after the company reported fourth-quarter results that exceeded Wall Street's EPS expectations, though revenue missed. The lower revenue was caused by fewer store openings than expected (394 new stores vs estimates of 433) while the higher profitability was driven by outperformance in its U.S. same-store sales growth, which clocked in at 2.8%, marking an acceleration from its 1.6% growth for all of 2023. Furthermore, the company signaled its commitment towards returning value to shareholders as the Board approved a 25% increase in its quarterly dividend to $1.51 per share and granted an additional $1.0 billion for its share repurchase program. Lastly, on December 7, 2023, the company shared its long-term estimates at its Investor Day; management forecasts 7%+ annual retail sales growth, 1,100+ annual net store additions, and 8%+ annual operating income growth for the foreseeable future. Overall, this was a mixed quarter for Domino's, but the market is likely happy about the company's accelerating U.S. same-store sales growth.
Is now the time to buy Domino's? Access our full analysis report here, it's free.
What is the market telling us:
Domino's's shares are not very volatile than the market average and over the last year have had only 4 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Domino's is up 11.2% since the beginning of the year. Investors who bought $1,000 worth of Domino's's shares 5 years ago would now be looking at an investment worth $1,817.
When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.